tv Bloomberg Markets Asia Bloomberg November 16, 2016 9:00pm-10:01pm EST
they widely derided during the campaign. shinzo abe is the first foreign leader to meet the president-elect. let's get you straight to the market action. , day of mixed fortunes something for the bears to put their hats on, haven't we? bonds, action coming through, boj announcing the first unlimited bond purchases as yields jumped. have seene we movement coming through there. to maturity off by three basis points. .05 basis point drop as well. this is after the central bank said it will carry out two operations, buying securities
maturing and 1-3 years, and the other three-to five years maturity, this as we have seen bondslloff in japanese threatening. quite a lot of moves in that space. we are seeing the nikkei flat. we did have momentum coming through during yesterday's session. elsewhere, mostly selling, particularly from some emerging markets that have been under significant buying, malaysia off jakarta still holding on after it rebounded from that four-month low. the dollar will play into emerging markets. philippines third-quarter growth stronger than expected, 7.1% year on year. today,tock moving higher so a gain of over 2%, i market
that has been doing quite well. the hang seng firmer for a third consecutive session, up by .2%, led by consumer related stocks. galaxy looking quite strong. from the banking players, but this has been the area where we have seen support over the last couple of sessions , and downward pressure from proper developers as well. sx movinglia, the a sx higher. new zealand giving up gains after wednesday's movement. the yen his strengthening against the dollar, towards that 109 handle. rishaad: right, let's get you up to speed with first word news.
a key member of donald trump's team says the incoming administration is considering how to fix roads and bridges and a way that hillary clinton promoted in the campaign, and the publicans derided. talks of a so-called infrastructure bank to pay for the work, something the trump team said is controlled by washington and funded by an increase on business. >> the focus is regulatory looking at the creation of an infrastructure bank to fund infrastructure investment, so are a lot of things to do. the economic priorities our taxes, regulatory, trade, and infrastructure. right now, we are just at the planning stages. we want to be in a position to execute the economic plan. i am focused on the policies right now. haslinda: a key advisor to the
japanese government says shinzo abe should at $21 billion to the budget to jumpstart the economy. the additional spending is needed to meet the gdp target. he is aiming for 5.5 trillion dollar economy by 2020. he also says donald trump's focus on boosting & could help japan's fiscal policy. opec nations and russia meet today, but iran and iraq will not be there. the cartel is in a campaign to reach agreement on output cuts, but tehran and baghdad say they won't lower production. opec has struggled to reach the hours of 18 talks last week and failed to bridge the divide. to clearmog has begun in beijing after the authorities
issued a heavy pollution warning for today and friday. school children, elderly, and those with breathing problems have been told to stay indoors and refrain from strenuous activity. some factories have been shut temporarily, with the air quality index hitting 260 before dawn, 10 times accepted international levels. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. talking of china, china's holdings of u.s. treasuries at the lowest level as it draws down reserves to support the following yuan. what does the data tell us? >> more clarity than the skies of beijing. a further drawdown of u.s. treasuries and the fx reserves. it is when the pboc was trying fallingthe yuan from
prior to the sdr inclusion. net selling of u.s. treasury total in september was $76.6 billion, $28.1 billion of that was from china august to september, so china now holds 1.16 train dollars in u.s. bonds , notes, and bills. is the pbocseeing trying to keep the yuan from falling too fast, but now we have seen the yuan fall as far as 6.88 yesterday. it is strengthening today. the indicates that authorities in beijing are allowing it to go weaker. rishaad: we have seen this weakness and saw today's fix, the 10th straight week, but then some strength creeped in. >> it was 10 straight days that
they set the fixing rate weaker, but because of the weakness yesterday, 6.88, it was weakened by .3%, but it is strengthening today, putting a halt. prior to today, seven out of the previous eight sessions showing weakness. rishaad: tell me, what is the outlook? what are people saying? they are saying seven, but the first quarter of next year. >> analyst and traders we have surveyed say they are becoming more bullish than the previous survey, saying seven to the dollar will likely happen in the first half of the year according to 14 out of the 16. it was 6.83 before the de-pegging in 2008, so it has been quite a while.
ascould happen as quickly ocbc says itand will happen in january. rishaad: japan central bank announcing its first unlimited bond purchases. kevin, what is going on here? yes, they have in ploy day they introduced at the end of september. they have not used it until today, but obviously getting uncomfortable with how far the yields have climbed in sympathy with the rise globally on the rise in treasury yields after donald trump to win in the election looks like it would spark stimulus and potentially inflation, and so the yields have been rising in sympathy with that, but the market, investors throwing down the
gauntlet to governor kuroda overnight with the spike in the benchmark yield at the highest since february. he picked up the gauntlet and acted today was something brand-new, fixed rate purchases, the new tool, and unlimited amounts, so going straight for the jugular, i guess. rishaad: absolutely. they have popped up into positive terrain, so it was time to snap them up, wasn't it? yes, it has surprised some in the market that they acted so quickly. doesusly governor kuroda still saying and today that the target is around zero. we are not much above zero if you think about it, but obviously he said we will not let the market just run. this is the fastest pace for yields to climb since the rebound from the record low in
the beginning of august to come so a very fast pace, so maybe that is more worrying for the central bank and the actual level, but like i said, some surprise that he did act today. the idea was maybe that yields would sort of come down by themselves, because above zero, there is demand from domestic investors as well. i guess the idea was to say not so fast. rishaad: thank you very much indeed for that. move at the start of this unlimited online. right, we are looking more at japan, and looking at how they are tackling deflation, finding ocbc thinks the country still has potential. we will look at that and more. ♪
quick check of the latest business flash headlines. sources telling bloomberg that j.p. morgan will pay 200 million dollars to settle an investigation into hiring practices in china. themank is accused of throwing children of officials to win business, following a three-year inquiry into whether the bank hired these people and violated u.s. antibribery laws in the process. five other banks are still being investigated. rio tinto ending the contract over an inquiry into its iron ore operation. -- rio tintoive issuing a statement. there was at
failure to maintain the minor conduct code of standards. finance, and video streaming come all helping to offset the slowdown in china and fuel its bottom line. revenue for tencent two $6 billion, net income was 1% below market expectations, coming in at $1.5 billion. wang jianlin stepping up his challenge to disney with the second $15 billion project in a week, building theme parks and commercial centers and a result. -- a resort. will add 15 complexes across china by 2020. broad dollar index the highest since february, expectations the u.s. economy may get a medium-term boost from
donald trump's policies. our next guest says dollar strength is set to become more selective as yield slow down. thank you for joining us. give me your thinking. what is behind your thinking. .et's have a look >> what has been driving the dollar strength has been the reflation trade in terms of risk on. the rise in u.s. yields are the result of fiscal stimulus, and that has been leading a broad strengthening of the u.s. dollar, but we have come to a point where there has been a sharp rise in the u.s. in a short span of time, and we could the dollar.ation of
increasingly, i see dollar strength selective, and i am worried about chasing dollar strength at these levels. , keyupport for euro support at 106 and resistance around 111 four dollar-yen. rishaad: people have been surprised by its resilience, suddenly we saw this breakout take place adjusting if we go over that line you mentioned, we could see further weakness, but some are targeting the all-time lows in the mid 80's, and that was when the euro was introduced. what is your view? >> i think that could happen if we have a souring of the european political outlook. politics are heating up with the time referendum, french elections, german elections, so it is a possibility, but at the
same time, if the flipside could happen that we don't get a political surprise, nothing taper in thehe ecb middle of next year, then euro will be well supported, so i think it is a risk here, but from the technical picture, there is strong support around 106. the yen let's look at as well. some to medical moves there, and we have this bond purchasing plan just announced by governor kuroda this morning as yields went positive. what was your take on that? >> i think it is a reinforcement of their commitment to keep the 10 year bond yield at around 0%, so i think that in itself should , andr the jgb yields therefore as a result, the dollar-yen is a function of
where the u.s. is moving. , but has moving higher i have said, we have, long way ad the market is pricing in lot of the stimulus with little to go on, and if the pendulum swings back to trade retaliation fear and we see a reverse of u.s. bond yields, this could undermine the run-up in the dollar-yen. rishaad: the big story at the moment has been this constant weakening by the people's bank of china of the renminbi. we saw a weaker fixed today, 10th straight weaker fixed. the thing is that strengthened a little bit, but what is the read through on this? >> i think the read through is that the chinese central bank is ,oing what it said it would do
follow the fixing mechanism and keeping the chinese currency on -- on a stable basket basis. the fixing is a reflection of the dollar strength we are seeing, and i think in terms of the impact on the region, the authorities are probably quite happy it has been contained in terms of chinese currency -- so far, so good. about aet is cautious possible acceleration of the chinese currency depreciation, but so far i think they are keeping to their word and our best case remains for a gradual depreciation of the chinese currency. say in your research that currently markets are all in on the positives or the potential positives of a donald trump presidency.
now the thing is, they are ignoring the negatives. that is your thesis essentially here. looking aty start these negatives, for example, global trade wars and trade agreements, which could be the worst case scenario. >> i think it is hard to tell. newepends on what is the administration stance. so far, we have very little to go on in terms of actual details -- hike they do step up in the trade tariffs, potentially that could be bad for global growth, bad for u.s. growth, and potentially a risk off, so the dollar strength we have seen may reverse against currencies like the yen, the euro, the swiss, and possibly gold. the dig losers would be the
president-elect donald trump meets his first foreign leader later thursday, shinzo abe. trade relations set to top their agenda in new york. isabelet over to reynolds in tokyo, what are the issues that most concert japan and the rest of asia about donald trump? , japan iswell probably the country most shocked by donald trump selection. they were looking for more
continuity on policies they had been working on in recent years, so the top priority is to get in early with donald trump and make make ad impression, -- good impression, and form a good relationship between the two leaders. taken aback because donald trump went in for a lot of japan bashing during his election campaign, firstly on trade. he has said he wants to pull out , something japan has worked hard to push through. the second thing was donald trump threatened to remove u.s. troops from japan, which japan would find a frightening prospect indeed. those are the two things that will be at the top of the agenda this time. rishaad: tell me something, how to tackleabe planning these as the first world leader to me donald trump post election? >> it will be an extremely soft approach. in ao abe got
congratulatory message quickly after the election, complementing trump and not pushing too hard on these issues. they have had one phone call which seems to have gone well. donald trump has said he does see the alliance between the two countries as important, so there are positive signs, but this will be very much a charm offensive. be taking hisl wife with him, so perhaps he will try to make this a kind of effort to form some kind of and that's one of the issues he has here. donald trump is seen as a risk broadly by the electorate. is unpopularown he and people see him potentially harming japan's economy and national security. made comments he
just before he left for new york, didn't he? what did shinzo abe have to say? made a fewnzo abe comments before taking off for new york, and he was emphasizing how he sees this as a great honor to be the first world leader meeting trump, and he actually referred to how he wants to discuss their shared dreams for the future, so he is him us exaggerating how close the two can get. by contrast, we had the deputy prime minister a few minutes ago talking and saying that donald shows he is either flexible or ignorant about ties with japan. rishaad: thank you very much about that. 's trip to new york in meeting with donald trump on thursday. coming up, the growing influence on commodity prices,
speed always wins. especially in my business. with slow internet from the phone company, you can't keep up. you're stuck, watching spinning wheels and progress bars until someone else scoops your story. switch to comcast business. with high-speed internet up to 10 gigabits per second. you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business. wifi pro from comcast business. public wifi for your customers.
private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. >> it is 10:29 a.m. in hong kong. this is first word headlines. the boj and announced its first operation to buy bonds at a fixed rate. the central bank will carry out to bring operations, one to buy securities maturing in one-throw years, and another 3-5 years maturity. selloff demonstrates -- the pboc has weaken the yuan fixing. the currency is trading around eight year lows, and analysts
see it weakening to seven in the first half of next year. china'sst data shows holdings of u.s. treasuries fell to the lowest level in four years. singapore's non-oil exports posted the longest decline in seven months, driven down by a slump in pharmaceuticals, shipments dropped 12% with pharmaceutical exports holding. it is due to weaker global demand and the slowdown in china. philippine shares jump after gdp growth quickened to more than 7% last quarter, underscoring the nation's resilience to global risks as president rodrigo duterte boosts state spending. infrastructurean
program, expecting gdp to expand 6% over the next six years, among the fastest growing in the world. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: this is bloomberg markets: asia. i am rishaad salamat. getting it over to juliet. what the let's look at ,ikkei is doing, pretty flat but we did have a good rally from japanese equities in yesterday's session, holding on to this nine-month highs. weakness coming through and china, chinese stocks down for a third session, the shanghai it didte off by .5%, but rally to that 10 month high. in hong kong, stocks in the .1%, supportby
coming through from consumer related stocks. a very solid rally coming through in the philippines. i up, faster economic growth in the third quarter than expected. upsidestray a, some there, up by .25% on the asx 200. created laste month, but unemployment still at 5.6%. the number of jobs created was weaker than what the market was looking for, that it is always a volatile series. bonds gaining today, particularly in the two, five, and 10 year notes in japan after the boj announced unlimited bond purchases after we did see yields job. it is the first time they have
announced that they will purchase into the bond market since they announced that yield control on september 21, a tool they introduced to control that yield curve. the two-year, five year, and 10 year, so quite a bit of movement in the bond market today. asia's largest internet company says revenue grew faster than anticipated in the third quarter, tencent, and we are looking at what is driving sales here. spending essentially more to expand and grow revenue, so revenue increased by 52% to 5.9 billion dollars, and tencent invested and businesses like online finance, video streaming, content, and building its cloud computing capabilities. that, spending increased, up by 69% in the quarter, so
that did squeeze margins, net billionrowing to 1.5 dollars, 43 percent, slightly below expectations. othere from the so-called segment, which includes cloud and payments more than quadrupled in the quarter. remember, it is moving into these areas on top of going into music and movies. traditionally, we have tencent relying on online gaming and content to drive sales, so what has been going on there? rosalind: this is still an important area for tencent. smartphone games jumped 87% in the third quarter. tencent says it has seen mobile game users pick up with daily active users past 100 million. tencent has china's dominant social messaging platform.
it's users are more than twice as many as twitter, and the mobile version had 647 million users at the end of the corridor , but tencent has this huge user base and continues to leverage the strength and build on it by creating an environment where they never really have to use other apps. it is helping itself to do that. let's take a look at what analysts think about it. you will see the white line is $.10 share price, and the yellow line is what analysts think it could be. target the 12 month price, and there are 41 buys, sells.holds, and no rishaad: the price of coal has , but citigroup says prices may have peaked, down to the rising u.s. dollar.
how did this come about? so hot after being in the doldrums for so long? >> it had been a bit of a dog for a while, down in the dumps for years, and the chinese government realized coal miners were sitting on mountains of debt. about $4achs estimated billion -- $4 trillion. there was an oversupply in the market and the government came , sond told them to cut back closing overcapacity in the mining industry. off withthings took prices doubling and quadrupling during that time. it seems they overshot the market a bit, and the efforts to tighten the market have led to this massive rally. rishaad: china did want higher
prices, didn't they? >> exactly, a little more than they needed actually. where they are now is getting to the point where it is getting too expensive to produce electricity, so the government is trying to cool the prices. haveder to do that, they common in and reverse some of these earlier policies, now asking the largest mining companies to increase production again. now they are asking them to sign long-term contracts to prices that are 20% below -- rishaad: that graph we had seems this effort to dampen prices is having some effect here. theight, we are seeing beginning of a cooling, benchmark prices falling for the first time in a year. production declines flatline, and it is still down 11% to date, but it has stopped falling further, so we have seen a slight pause in the rise and
it may pullback further from here. rishaad: thank you for that on coal prices and government efforts to cool the market down. ,eeping on with the same theme commodities are denominated in u.s. dollars, but increasingly it happens to be the chinese yuan influencing prices. our gadfly columnist is in singapore. how is the yuan affecting prices here? to how there related chinese view the yuan depreciation. mentioned, the commodities are all pegged to to hasu.s. dollar as the yuan been depreciating faster, the chinese have been taking on investing in commodities to safeguard their holdings, their investments in international terms, so part of this strong was delivered
in the local exchanges in china, then seeped out to the rest of the world. while there is a fundamental strength to that, there is also reason that these guys are just speculating because it is a good and keeping yuan purchasing power internationally even. rishaad: how come the yuan has been on this depreciation path, a weaker fix every day for 10 days now, but commodities are still dropping, so how do you square that? interesting part. commodities started dropping after peaking last week, and part of that is just a crackdown , so there was a lot of tiny speculation going on because people were investing there yuan in dollar denominated assets, in this case commodities, and the regulator started clamping down. in april, they put rules in curbing the ability of people to
speculate and commodities, but enforcement has been lacks, and over the last two weeks, enforcement has increased, and since it increase, you are seeing people unraveling these positions and the prices of commodities are dropping. rishaad: has it all been because they have been holding these prices up artificially, i suppose? >> it is not artificial. there is a fundamental value to it. china stimulus is pushing the price of commodities up, supply reform in china, at the same trumpou have donald coming in and promising infrastructure investment, infrastructure investment in philippines, across the world, so there is underlying expectation of more demand for commodities, and you can see the clampdown started two weeks ago, but commodity prices held together and started dropping this week, so there is
fundamental demand, but there is a level of speculation related to the depreciation of the yuan. rishaad: thanks a lot for that. a break. have to take coming up, saudi arabian prince tells bloomberg the world's tallest tower will be completed and the city must win a role in the aramco ipo on merit. this is bloomberg. ♪
aramco is ok. a more create transparency, more liquidity to so 5% or 10% of aramco is welcome by me, and if it is well understood by that this is community and saudi arabia and the region, they understand it and will appreciate it. >> will you buy the stock when it goes public? do you want to own part of it? let's cross the bridge when we come to it. i would do anything to support saudi arabia and the correct policies, because investing in saudi arabia is linked to that. >> citigroup would love a lead managing role in that ipo, and it had a lead underwriting role in the bond sale. is there anything you can do as
a member of the royal family to win citigroup that managing role? >> i never interfere in the and in the private ,ector and use my contacts never at all. citigroup has to do it and win on its own merits, not on my push. >> your building the largest , i understand construction has not gone as quickly as some might have hoped and that there has been some difficulty getting banks to lend against it, where do things stand? come yesterday, because the contract has faced some difficulties because there are problems previously, but now things are ok. delay,a few months of
but that is an incorrect statement because we have signed already to finance the thing until its end. right now we are back on track and are finishing at least one floor within 7-10 days. towill you need in anyway scale back the project or do you envision completing it the way it was originally envisioned? of the loansigning facilities 5-6 months ago, we have loans to take us to completion, so done deal. right, quick check of the latest business flash headlines with twitter suspending the accounts of some prominent white u.s. of premises to as part of plans to curb of those harassment associated with the so-called right movement.
twitter has faced criticisms about its failure to curb abuse. company is insurance continuing at shopping spree in north america. g will buy a tower in downtown toronto. the 30 storyuy building for almost $400 million. propertyy owns in toronto and vancouver. air conditioner maker has scrapped a plan to buy an electric vehicle maker after the proposal failed to win approval. it does not see further asset restructuring in the future. shares will resume trading friday after being suspended late last month. china has find tetra pak more than $97 million for violating
antimonopoly laws, marking the end of a for your inquiry. the swiss-based company prevented suppliers from working with its competitors. chinese regulators have increased scrutiny of foreign companies in recent years among a leading to heavy faisal. tetra pak says it will not appeal the decision. another multimillion dollar settlement for j.p. morgan. pay $2 million to settle allegations that it hired children of chinese officials to win business. su keenan sent us this. >> the announcement of a j.p. morgan chase settlement could, in the thursday wall street session and bring an end to a three-year high profile investigation over allegations that j.p. morgan chase recruited the children of elite chinese business decision-makers to wield greater influence. jpmorgan may pay $20 million to settle the probe.
deal, saidsecution to reflect the cooperation of the bank, neither jp morgan chase executives, employees, or the entity itself will face prosecution because those close to the matter said they were willing to turn over records and amend policies at the start of the inquiry. dropped at chase stock about 3% at the end of the trading day, then quickly regained ground, then recovery on the view this is one more legal matter that j.p. morgan may put behind it as possibly a positive. in terms of comment from j.p. morgan chase, its ceo, and the justice department, there was none as those close to the matter say details remain private until the announcement. ae investigation did spark debate on wall street has to whether u.s. business standard should be applied in foreign countries. whether such favorable
treatment by u.s. law is a crime. the u.s. justice department cracking down on enforcing its laws. willinggan said to be to pay $130 million to settle and $70 million in fines to settle with the doj. other unsettled areas of this program with the fed and the office of the comptroller. those close to the matter say this could result in additional fines to settle. there are as many as five unnamed other banks that are the target of such probes. we are told the settlement with j.p. morgan chase may well be the blueprint used to settle with the others. coming up, it's population declining, deflation , week,nd growth, well but japan still has untapped
in tokyo. it is a common opinion that japan is a risk-averse nation. what does the data show us? the oecd ishat that japanese companies are especially risk-averse. japan is the world leader in applications, more than the u.s., china, whose economies are bigger than japan, but japanese companies are not then using the patents to bring products to market. companiesapanese register new products and new businesses is much lower than its competitors in germany, the u.s., or other european nations. while these are untapped resources, they are not being
used to bring new products and innovation into the economy. what about hidden or untapped resource that the country could be drawing on here? come obviouslyto not all the patents are marketable products, but in addition to those things, there are still many labor market reforms that could be done to tap into japan's untapped labor potential. is the country needs to get more women into the workforce. at the labor force participation rate, it is about in same for men and women their 20's, but then drops off markedly when women leave the workforce to have children. it does not climb back up until women in their 40's and 50 move back into part-time work, partly due to the tax structure and
childcare responsibilities. they leave the workforce during their prime working years, but when they return, they have lost advancement and salary and coming back part time so that needs to change. japan wants to get its labor force petition -- participation rate up to where the oecd indicates it is. old people in japan retire early , lots of people retire at 60. if those people were encouraged to stay in the work lays longer, they would have more income, the country would have more output, and that would help boost the economy. looking at that hidden potential of the japanese economy. ahead on bloomberg, the big story so far. here is what is coming up. the yen pause after the boj
unleashes its unlimited law and buying emboldened by the surging yields since this global bond route took hold. 10, analysts are saying a seven handle next year. we look at the ramifications for a trumped victory, and more details on that meeting between shinzo abe and president-elect trump. we will speak to hsbc about what this potentially means for asian equities. ♪
♪ >> from our studios in new york city, this is charlie rose. charlie: we begin this evening with a look into president-elect's donald trump transition team, and his appointment of steve bannon. bannon is executive chairman of breitbart news, which he describes as the platform of the alt-right. the controversial pick has drawn criticism from democrats, civil rights groups, and some republicans. this comes as trump promises to unite a deeply divided country. joining me now is ken stern. he profiled bannon in vanity fair. also with us, joshua green and philip rucker and miae